Magnolia Arkansas To Vote On Sales Tax Increase
- Jun 25, 2012 | Susan McLain
Magnolia, Arkansas residents go to the polls tomorrow and included in their election choices is whether or not to raise the local sales tax.
The proposal is to “…raise the city’s sales tax by 0.025 percent – a quarter of one percent – to a total of 1 cent on the dollar. A $10 purchase in the city will cost 2.5 cents more if voters approve. A $100 purchase would cost 25 cents more.”
According to former City Treasurer Debbie Chatelain, “The city’s revenues from many sources are down, and expenses are up. The current trend will place the city in deficit spending by 2014 if no new revenues are found.”
The existing city ¾ cent sales tax is “…projected to raise about $1.12 million in 2012 and is by far the city’s largest single source of income. City Councilman Sam Whitelaw thinks a higher sales tax will raise about $500,000 more annually.”
The general fund is critical to city operations. Departments such as the police, fire, parks and street departments all pull from the general fund. “Payroll taxes, group insurance, office supplies, building maintenance, fuel-fuel-tires, contracted services, the city’s share of Central Dispatch, ammunition for police, hoses for firefighters, food for the dogs in the pound – all of it comes from the city’s general fund.”
The City Council has gone on record as supporting the sales tax hike. If the hike is voted in, voters will still be able to voice their opinion again at the polls in November if they don’t like what is happening with the increase. As a result of the city election ward boundaries being redrawn, “…all eight city council members are up for re-election this year. If voters sense that things aren’t going the way they like, they have the rare opportunity to vote in an entirely new council later this year.”
If the tax proposal fails, the city’s budget problems and concerns will still exist. To gain an equivalent increase in revenue to the proposed sales tax hike, the city would have to increase property tax by five-mill. Property tax increases are rarely a popular choice of gaining additional revenue and would take until 2014 before the revenue is evident in the city’s general fund. However, a city sales tax would take effect immediately and results would be seen within a few weeks as sales tax collections begin to be remitted.